The enterprise resource management (ERM) market in Australia is not only the most mature but also the most progressive, according to a recent IDC study. And it is increasingly targeting SMBs.
The company’s ERM Solutions 2004-2008 Forecast found that organisations across the vertical markets of manufacturing, financial services, communications, and government had implemented ERM and were continuing to upgrade their solutions and integrate them with business analytics and collaborative technologies.
IDC Australia senior analyst for enterprise applications, Bharati Poorabia, said SMBs in Australia were driving ERM growth by increasingly adopting solutions offered by international and local vendors that reflected their needs and budget.
“Global [ERM] players are rightly seeking new revenue growth in the SMB space,” she said. “With the decline in the enterprise segment spending, players have been living more off their maintenance and upgrade contracts than their initial license sales.”
The SMB market was additionally attractive as the number of deals transacted was much larger than in the enterprise company segment, providing some stability to revenue streams, Poorabia said.
“In the enterprise class, one huge deal can change the overall market size significantly, but this is not the case in the SMB space where the market is made up of numerous smaller deals,” she said.
IDC also found the trend toward integrated ERM suites posed a barrier to entry for new ERP vendors attempting to get into the Australian market as significant financial resources were required to develop enterprise wide suites.
“The current economic conditions and selective IT spending, coupled with the bursting of the Internet bubble, has left many vendors unable to maintain research and development and product development budgets,” Poorabia said.
This would put pressure on many best-of-breed and smaller ERP vendors, she said, so much so that they might think of merging together to pool resources in order to survive the competition and develop more niche, specialised solutions.
The study also forecast that the market, estimated to be worth more than $1.09 billion in 2003 would be worth $1.62 billion by 2008.
It would grow 8.2 per cent annually over the next five years.
Poorabia said this growth would be driven by cautious IT budget spending, currency fluctuations and a pullback from expansive solution implementations.
“Demand for ERM solutions is still growing,” Poorabia said.
“Organisations will make the conscious effort to link their internal back-end solutions with front-end and extended-end solutions in order to gain a wider view of full business operations.”